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Facepalm of the Day: Rhode Island considering DROPPING their perfectly good exchange for HC.gov

Mon, 01/19/2015 - 8:09pm

Sean Parnell has posted a fairly negative story on the Rhode Island exchange, HealthSource RI. This is fairly unusual, because Rhode Island's exchange is actually one of the better ones...it operated fairly smoothly both last year and this year, and they're the only state which willingly followed the "no autorenewal" advice which I was giving to all of the exchanges way back in June (a few other states didn't allow autorenewals either, but that wasn't their choice...the new software platform wasn't compatible with the old software).

The problem in Rhode Island is that no matter how smooth and drama-free the exchange's operations have been, the actual numbers just haven't been up to snuff:

Rhode Island officials predicted in 2013 up to 100,000 residents of the Ocean State would use the state-based exchange established under the Affordable Care Act to buy health insurance. In the end, they saw 27,961 people enroll during the 2014 open enrollment period, a number that declined throughout the year as many enrollees either failed to pay their first premium or later dropped coverage.

The reason this is a problem is that the state exchanges have to financially support themselves at this point--the federal start-up money allowed for under the ACA has dried up, so unless the state wants to add money to the pot themselves, it's sink or swim for the exchanges...and that's based on fees, which are in turn based on how many paying enrollees they have. In RI's case, they're apparently coming up short.

However, that's not why I'm writing this. I'm writing this because of the "solution" which is being pushed for by a Republican state legislator (and which, more bafflingly, apparently has some Democratic support as well):

One solution has been offered in legislation introduced in 2014 by Representative Patricia Morgan (R-West Warwick) that would prohibit any taxpayer dollars from being used to fund Rhode Island’s exchange and turn operations over to the federal exchange, saving the state from having to pay for the exchange. The bill drew bipartisan support with several Democratic lawmakers signing on.

“There is a perfectly good platform called the federal exchange,” Morgan said. “It is less expensive than Healthsource RI. Using it avoids duplication. And it doesn't add another burden to our business climate.”

Look, don't get me wrong: I understand that Rhode Island will have a serious funding problem if they aren't able to substantially ramp up their enrollment numbers over the next month.

And yes, it's a breath of fresh air to hear a Republican lawmaker openly admit that the much-maligned HealthCare.Gov website is a) "perfectly good" and b) "less expensive" than the state exchange. That's awesome.

However, there's a teeny, tiny little problem with this suggestion. I'll give you a hint: It rhymes with "Bing!" and it's set to be heard by the Supreme Court of the United States this March, with a ruling likely to come out sometime in June.

IF the SCOTUS ends up shooting down the King v. Burwell case, then fine: Rhode Island legislators can think about pulling an Oregon/Nevada and moving their operation onto the Federal ACA exchange. And yeah, I suppose there's nothing wrong with at least doing some prep work just in case that ends up being how things play out. After all, I've been hammering other states for not getting their ducks in a row early in the opposite direction.

The difference is that Nevada and Oregon had no choice (well, I suppose they did...both Maryland and Massachusetts scrapped their exchanges as well, but replaced them with all-new software).

HOWEVER, if the SCOTUS does rule in favor of the King plaintiffs, does so in such a way that does, indeed, strip all tax credits from HC.gov policies, and there isn't any Congressional fix which immediately follows (chances of them doing so: Jack and Sh*t, and Jack left town), then it would be beyond insanity for Rhode Island, which already has a working, fully functional exchange, to shut down operations. I'm already ripping on 30-odd states for not taking any action to set up their own exchanges...this would be even worse: Deliberately scrapping the one you have when there's no functional reason to do so.

Now, it's possible, even likely, that neither Nevada, Oregon nor Rhode Island would lose their tax subsidies in that case; all three already had "established" their own exchange, so I think they'd all be in the clear legally. However, I'm still not sure about that...and until that's clarified, it would be insane to make such a move.

Yes, that would leave them with a funding problem...but compare that to the havoc wreaked upon the state's healthcare industry if King prevails and the tax credits are torn away.

I don't know what the funding solution is. Maybe they need to streamline operations. Maybe they need to increase the fees on the existing policyholders. But until the King decision comes down, they should hold tight.

So really, guys: It's fine to discuss the possibility of pulling up stakes & moving to HC.gov, but for the love of God, don't actually do so until after you're sure that the credits are still going to be there for the enrollees, okay???

As for Rhode Island's actual enrollment, as of January 10th it was 27,690, and they've been averaging about 340/day since the January enrollment deadline. A straight-line projection at that rate would bring them to around 40,000. Their February deadline isn't until this Friday, so there will likely be a small bump this week, plus another likely large bump from February 10th - 15th, so I'm guessing that their actual enrollment number will end up somewhere between 45K - 50K at this point (as it happens, my previously-stated target for RI is 47K, right in between).

Assuming they retain 89% of their total this year, 47K enrollees should result in around 42,000 still enrolled by the end of this year.

According to Parnell's story, HealthSourceRI will cost $27.68 million this year, with $9 million being paid for with the last of the federal funds. That leaves around $18.68 million left (fine, call it $18.7 million). Parnell says that this would add "nearly $600 to the cost of each plan" based on current enrollment (he's assuming around 32K enrollees, it appears). If I'm correct about the consistently paying number being closer to 42K, that will help...but not much; you'd still be talking about $450 per person.